SUMMARY:THE ELECTRONIC COMMUNICATIONS BILL

BACKGROUND

On the 15th and 16* July 2003, the Department hosted a national colloquium on the Convergence policy process where all operators and stakeholders in the ICT industry were consulted and committees were formed to ensure participation of the industry in the drafting of the bill. On the 3rd December 2003, the draft Bill was approved by Cabinet to be published for public comments. The Department received comments that were incorporated into the Bill through the Inter Departmental Committee on convergence that composed of various Departments. The current communications market structure of the broadcasting, IT and telecommunications are technology based and forced operators to be prescribed as Public Switched Telecommunications Services, (mainly consisting of fixed line connections), mobile cellular, Value Added Network Services, Signal distribution or broadcasting. On the other hand the transport medium is the same for all services. Convergence will bring about increased cost saving advantages due to the bundling of services, even those that were seen to be unrelated.

WHY THE CONVERGENCE/EC BILL

The Bill provides clarity between networks and facilities as platforms for facilitating a multitude of end-user services rather than trying to narrowly define users as only "mobile" or only "fixed" networks. In this regard, the Bill's emphasis is properly focused on fair and efficient access and interconnection. Networks and facilities comprise the "platforms" from which a "services" layer can be applied. Thus, obtaining access to those platforms is imperative to growth in the market and attaining the benefits for consumers. The Bill is intended to secure access in an efficient manner to ensure that competitors can lease facilities at wholesale prices and pass savings on to their customers in real price reductions.

The Bill is a forward-looking policy and regulatory framework intended to establish a proper governance of the ICT sector in a converged environment.

The Bill will further promote wide spread usage of electronic communications services.

provide further clarity on the role of the Independent Communications Authority of South Africa (ICASA) and the policy maker-(the Minister of Communications)

make provision for new types of electronic communications licenses that are horizontally structured instead of the existing vertically structured services. The Bill also provides continuity of
the managed liberalization process especially considering the policy announcements removing restrictions in telecommunications by the Minister of Communications in September 2004.

OVERVIEW OF THE BILL

Chapter I - Introductory Provision

The bill revises certain definitions contained in the Telecommunications Act and Broadcasting/IBA Act to account for convergence and introduces new definitions with respect to the new unified licensing framework and convergence of technologies. In addition this bill also sets forth the primary objectives of the Act, including, among other things, the promotion of the convergence of telecommunications, broadcasting (to the extent broadcasters utilise their facilities and spectrum to offer next generation services in a digital era) and IT, the encouragement of innovation and growth in the communications sector and the promotion of competition.

CHAPTER 2 (Policy and Regulation)

The Bill sets forth the delineation of powers between the Minister and ICASA. The Minister's primary responsibility shall be to set the national policy for the communications sector and determine the priorities for the development of communications networks and services, including,
among other things, the management of spectrum, the Republic's participation in international communications matters and the promotion of universal access. ICASA shall bear responsibility for implementation of the national policy and the promulgation of regulations related to the communications sector as contemplated in the Bill.

CHAPTER 3 (Licensing Framework)

The bill creates a unified licensing framework to ensure that market participants offering similar services are treated equally in respect to the license conditions applicable to the services and/or facilities provided. The licensing framework incorporates two basic licensing categories:
- Individual licences
- Class licences

Individual licences are reserved for those services requiring extraordinary regulatory mechanisms, such as the use of scarce resources or the need to obtain rights of ways for the construction of facilities. Individual licences are also reserved for those services requiring use of the radio frequency spectrum, which is a public asset and requires careful planning and utilisation to ensure the efficient use of this limited and scarce resource. The Authority in the class may grant the following categories of licences:

= Electronic communications network services
= Radio frequency spectrum
= Broadcasting services licences
= other services as may be prescribed from time to time.

Class licenses are intended for the provision of electronic communications services or applications services. This gives ICASA authority to exempt certain services from the licensing obligation altogether. This is to allow free and open competition with minimal regulatory involvement except where one or more market participant has acquired position of dominance that can have an adverse impact on competition and abuse of market position. The Authority in the class may grant the following categories of licences:

= Electronic communications services
= Resellers
= Data services
= other services as may be prescribed from time to time

The bill further establishes a framework for the application, granting, amendment and renewal of licences and directs ICASA to prescribe the processes and procedures related thereto. ICASA shall set the standard terms and conditions to be applied to each category of license consistent with the framework set out in this chapter. The authority is also granted the powers to establish additional terms and conditions applicable to particular licensees if they are found to have (i) significant market power; (ii) control of essential facilities; (iii) universal access/service obligations; or (iv) are vertically integrated such that they could harm competition in a given market segment. With the exception of radio frequency spectrum authorizations are to be issued to security services by the Minister.

CHAPTER 4 (Electronic Communications Facilities and Networks)

The bill provides for the electronic communications network services licensees and provides a legal framework defining their rights to enter upon public lands or waterways, and access or lay underground conduits for the purposes of constructing, repairing or removing communications
facilities. This bill also prescribes certain rights and obligations where licensees' access public property, including the height and depth of its network facilities; the licensees rights to remove obstructing objects such as trees; and the licensees rights vis-a-vis other public works contractors, such as those supplying railways, heat, or power.

CHAPTER 5 (Radio Frequency Spectrum)

This chapter vests ICASA with authority to control, plan, administer, manage and licence radio frequency spectrum in accordance with the international regulations and directs ICASA to prepare a radio frequency plan for the allocation of radio frequency spectrum among users within the Republic. The bill enables ICASA to coordinate with the Minister regarding the allocation of spectrum to security services. Provisions also provide for control or possession of radio apparatus and require radio frequency spectrum licensees to coordinate their respective usage of frequencies in good faith and to desist from causing harmful interference to other licensed users.

CHAPTER 6 (Technical Equipment Standards)

In general, this bill requires that all communications equipment, communications facilities, or radio apparatus be approved for use by ICASA and authorises ICASA to prescribed types of communications equipment or types of communications facilities that do not require approval. ICASA may also prescribe standards for the performance and operation of certain communications equipment or electronic communications facilities, including radio apparatus.

CHAPTER 7 (Interconnection)

This Bill creates a general obligation on all communications network service licensees to interconnect with any other communications network service licensee who so requests, unless such request is deemed unreasonable by ICASA. Reasonability shall be determined based on technical and financial feasibility and whether the requested interconnection will promote the efficient use of communications networks. The Bill also sets forth principles to be incorporated in interconnection agreements and directs ICASA to prescribe regulations to promote the prompt settlement of interconnection agreements and the resolution of interconnections disputes. ICASA shall also have the authority to establish interconnection rates to be charged for specified categories of interconnection and associated services where a market participant is found to have significant market power on a relevant interconnection market.

CHAPTER 8 (Electronic communications facilities leasing)

Chapter 8 creates a general obligation on all communications network service licensees to lease electronic communications facilities, upon reasonable request, to any authorized electronic communications network service, electronic communications services, or application services licensee. Reasonability shall be determined based on technical and financial feasibility consistent with the standards. ICASA shall have the authority to intervene where an electronic communications network service licensee refusing a request to lease electronic communications
facilities and shall prescribe regulations to promote the prompt settlement of electronic communications facilities leasing agreements. The chapter also set forth general principles to be incorporated into electronic communications facilities leasing agreements and requires that all such agreements be placed on file with ICASA. Further, the chapter provides for procedures for the resolution of disputes, and permits ICASA to set wholesale rates for the leasing of electronic communications facilities.

CHAPTER 9 (Broadcasting Services)

This chapter carries forward the prohibitions in respect of broadcasting services imposed upon political entities and requires that broadcasting services licensees adhere to a code of conduct prescribe by ICASA. In addition broadcasting services licensees must also adhere to a Code of
Advertising Practice and shall be subject to adjudications for any breaches thereof. The chapter also contains guidelines for public broadcasting services regarding the broadcasting of party elections and requires all broadcasting services licensees to treat political parties equitably. Subscription broadcast services are prohibited from obtaining the exclusive rights to certain events. Lastly, the chapter provides for general objectives to be applied to all broadcast services, including
among other things, priority carriage for South African programming, the delivery of public services, and an open, interoperable and harmonised distribution standard.

CHAPTER 12 ( Consumer issues)

This chapter directs ICASA to prescribe regulations setting forth a consumer code of conduct, including among other things, minimum standards for customer service charters and the establishment of an Investigation Unit within ICASA. Further, where ICASA determines that a
market lacks effective competition or that consumer interests reasonably need to be protected, it may prescribe regulations related to wholesale and retail tariffs for the provision of communications network services, communications services or any other services contemplated under the Act.

CHAPTER 13 (General)

Provisions in this chapter address the establishment of an ICT for government initiative and designate ICASA as a "regulatory authority" in respect to the communications sector under the Competition Act, 1998 and permits ICASA to take certain actions to ensure fair competition in
the sector. Further, the chapter also addresses the maximum penalties and fines that may be imposed under the Act and carries forward from the Telecommunications Act the application of number portability, carrier pre-selection to the new converged services and the requirements
associated with the provision of directory services. Lastly, the chapter also carries forward provision in the Telecommunications Act related to the establishment of 112 Emergency Centres.

CHAPTER 14 (Universal Service and Access of South Africa)

This chapter provides for the continuing of the Agency, financing, administration and management of the ("Agency"). The Bill also changes the name of the Agency from Universal Service Agency (USA) to Universal Service and Access Agency of South Africa (USAASA). The Agency shall continue to strive and promote universal access and universal service and facilitate new methods for attaining the Republic's goals with respect to universal access to electronic communications
services. In this regard, the Agency may conduct investigations, issue reports and make recommendations to ICASA and the Minister related to universal access and universal service policy. Further, the Agency may, in consultation with ICASA, initiate grants to promote the deployment of electronic communications facilities to under served areas. Funds for such grants will be drawn from a Universal Service Fund that the Agency shall administer in accordance with the instructions of the Minister. Every holder of a license granted under Chapter 3 shall pay a prescribed annual contribution to the Universal Service Fund. Finally the Bill gives the Board of the powers to appoint the CEO. Pages

CHAPTER 15 (Transitional Provisions)

The chapter provides for processes and procedures, including timing, for transitioning existing licences issued under the Telecommunications Act or the Broadcasting Act/IBA (relating to signal distribution) to the new licencing framework. The process is designed to facilitate the transitioning of existing licences with minimum delay and disruption of the market. The Bill also provides for a review and, as necessary, modification of existing regulations to conform to the new legal and regulatory framework.

Note: Chapter 10 and II are old chapters in the telecommunications Act.